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Why are fewer American nationals renouncing their US citizenship?

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Helen Burggraf - [email protected]
Why are fewer American nationals renouncing their US citizenship?
Why are fewer Americans renouncing their citizenship right now? Photo by JOHN THYS / AFP

More than 3,000 American citizens formally gave up their US citizenship last year but that number reflected a drop when compared to some recent years, with suggestions that many who are intending to renounce are delaying the move.

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Some 3,260 Americans formally gave up their citizenships last year, according to a list of recently-published names on the US government's Federal Register website.

The number for 2023 is lower when compared to totals from previous years.

More than 30,000 Americans have given up their US citizenship over the past decade, according to the list of names published quarterly by the US government.

The number of Americans renouncing has been running at between 1,000 right up to 6,000 a year since 2010.

The reason some observers give for 2023’s relatively low annual total number of Americans renouncing citizenship is that many US nationals living in Europe and through the world intending to make the move are waiting for a major reduction in the fee they are charged to give up their passport.

READ ALSO: Why are more and more Americans giving up their US passports?

The State Department vowed in January last year that it would significantly lower the fee it charges for renouncing – from $2,350 to $450 following a legal challenge. However since October there has been no news.

Americans intending to renounce - many for tax reasons - are still waiting.

John Richardson, a Toronto-based lawyer who helps American expatriates to navigate the often complex renunciation process, says a number of his clients have told him that they’re holding off on submitting their applications in order to take advantage of the $1,900 they would save with the reduction in the fee.

“This reduction in the fee was first mentioned by the State Department more than a year ago – in January of 2023 – as part of its official response to a legal challenge over the fee’s unfairness and ‘unconstitutionality’,” Richardson said. “Some of my clients and others are starting to become extremely frustrated that it’s taking so long.”

The legal challenge was made in a US District Court in Washington, DC, in 2020, by the Paris-based Association des Américains Accidentels (Association of Accidental Americans), in partnership with some 13 "accidental American" co-plaintiffs from around the world.

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Failure to cut fee is 'deplorable"

London-based US national Liz Zitzow, who helps other Americans with their US taxes and renunciations agreed that “lots of people are waiting for the fee to drop."

She also believes US consulates that carry out the renunciation process are still in "post-Covid mode" – and thus simply aren't processing as many applications.

“I find the length of time it’s taking them to enact the reduction in the fee, given that they announced it more than a year ago, deplorable,” Zitzow said.

“Many of the people who are looking to give up their US citizenships are doing so because it’s so costly to remain a citizen, while living abroad…so obviously, the difference between $2,350 and $450 is going to matter a lot to them.” 

State Department 'working on the final rule'

Asked about the proposed reduction in the renunciation fee, and when it might be expected to come into force, a State Department spokesperson made reference to last October’s public consultation on the matter, which ended on November 1st.

“The Department is in the process of considering and developing responses to comments. That review process is ongoing, and the Department is actively working on the final rule," the spokesperson said.

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Fee only introduced in 2010 with FATCA

Renouncing American citizenship used to be free, and not much talked about, until 2010 – the year when the new regulation known as the Foreign Account Tax Compliance Act (FATCA) was signed into law.  That year the fee for renouncing was set at $450. In 2014, this was hiked by 422 percent, to $2,350.

The numbers of those giving up their US citizenship only became a topic of interest after the numbers of those renouncing began to increase after 2010 due to FATCA - which came into force in 2014.

FATCA basically mandates stiff penalties for “foreign financial institutions” (FFIs) that fail to report to the US authorities the bank account details, including assets, of any of their clients who happen to be US citizens or Green Card holders.

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But its unintended (and massive) side effect was to cause many non-US financial institutions around the world to suddenly refuse to accept American clients at all – even if they were living in the country in which these institutions were (and are) located, and had held accounts with these institutions for decades.

So even though the number of renunciations in 2023 was comparatively low compared to recent years, it is still many more than in the years before FATCA came into law, the data from the Federal Register's quarterly list of names reveals.

While many experts question the accuracy of the data obtained from these lists, in the absence of other sources of these numbers, interest in them remains – with the result that those interested in tracking the numbers of Americans giving up their citizenships watch the Federal Register closely four times a year, in order to examine its latest "Quarterly Publication of Individuals, Who Have Chosen To Expatriate".  

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Cat 2024/02/11 19:27
I renounced mine in 2020 and my name has never appeared on the list.. Renounced because I was unable to get a social security number, so could not file taxes (moved away from the US when I was 8 years old) and I did not want to keep having trouble running a bank account. Now I have the certificate of loss of nationality, my bank are fine. But that's one of the reasons it won't just be gazillionaires giving up their citizenship. It's a pain in the butt for us nil-illionaires too!
Bruno 2024/02/10 16:55
The way I understand it is that American citizens still get taxed wether they live abroad or not ? But frankly, 1900 usd difference between now and what’s planned is ridiculously low, 150 usd a month roughly……I thought only gazillionaires were interested in giving up their citizenship.
Jean Martin 2024/02/09 18:35
The numbers are actually higher. It is well known that the lists are incomplete. I personally know several people who renounced their US citizenship within the last 2 years and their names have never appeared in these lists.

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